PILOTed

Tight Education Market Emphasizes Need for Smart Selling

Alan Stern talked with Karen Meany of Simba's Electronic Education Report (EER) about selling educational materials and introducing new products into the school market in challenging economic times. Formerly national sales director for the Siboney Learning Group (St. Louis), Stern now provides sales management services at Academic Business Advisors (Chappaqua, N.Y.), helping clients identify the right channel for their products and services. This article is copied from the December 1 Issue of EER with the author's permission.

EER: How does a market downturn impact the selling process?

One of the most important things is to position a product to address specific needs, as opposed to a discretionary product or “nice to have.” Also, as districts increasingly tighten up on spending, publishers are going to have to provide measurable results for their products; accountability for both results and purchases will be key.

EER: What funding sources should companies look to now?

As funding tightens, federal funding becomes more important. Th ere are more specific requirements that control it; it’s difficult to reallocate for purposes other than what it was intended for. Also, there are specific time frames, quite often, where the funds do need to be spent. What’s happening now is that federal funds are going to be targeted by more and more of the publishers because they are the available funds. Additionally, there are opportunities for partnerships with corporations and foundations that are interested in providing support for schools, especially as funding gets tighter.

EER: What are the challenges for new companies in this environment?

What we try to do at ABA is to match the product and service with the right sales channel. If the product is heavily content-oriented, it is important to have someone who understands what the content means and how it is implemented. If the product is more administrative or data-oriented, it might do better with someone with a different skill set.

The biggest obstacle for the emerging companies is brand awareness. Increasingly, the education market is being overwhelmed by marketing. There is so much noise in the market now, it’s hard for a new company to make headway. An advantage that wasn’t available before is e-mail and Web marketing. They have leveled the playing field a bit, but nothing beats feet on the street. Experienced salespeople bring so much to the table, there is no better way to reach a customer.

EER: We hear that sales organizations are now partners with schools, is this really happening?

Salespeople who have been in the industry for awhile are looked to as a resource. Schools have specific needs. Many schools have a wealth of materials available to them. Quite often what someone will say is: I don’t need one more book, I don’t need one more software program, I need to solve a specifi c problem. Increasingly, sales are focused on addressing that problem. It could be an increasing ELL population or a change in state standards.

A perfect example is what has been going on in California where there is a requirement that all eighth-graders are going to take algebra. All of a sudden that change requires a commensurate change in what the support materials are. If you address the specific pain, not only do you get a better response, but I think the schools get a better result.

EER: Does selling technology-enabled products to schools require more long-term involvement than selling other educational materials?

One of the biggest problems with software is it makes a lot of sense to present it and market it, but the use is where it falls off . The IES (Institute of Education Sciences) study on the effectiveness of software last year found no measurable results. But when you read the study, two things stood out. Th e teachers felt they were well-trained before they started using the software, but after they started using it they felt they were not well trained. Th at speaks right away to professional development. The other point is no one determined there was a need for the software with the students who were using it.

Two parts need to be considered: the nuts and bolts of the software—how do you enter students, what kind of reports are available—but the aspect that is likely to lead to better results is the implementation of the software. In a school, there may be a basal textbook and formative assessment being used, direct instruction going on and now there’s a software component. If those components aren’t integrated—if the teacher doesn’t know when to use the appropriate part of the software with a specific chapter in the textbook, for example—it will never be successful. The implementation and integration of all the tools is important.

EER: Are teacher learning communities and social networking sites changing the selling process?

They provide the ability for an emerging company to get more awareness in the market, but it’s a slow process. I don’t know that anybody has been able to quantify that they have increased their sales X% because they are blogging or using RSS feeds. But teachers rely on the recommendations of other teachers. Th e classic is when you walk into a school and are asked who is using your product. Social networking can go a long way and I think use of it is increasing. You see larger companies, like Microsoft and major publishers, getting involved.

Why so many businesses fail

I just listened to a lecture that really summarized why we are in business.

To set the stage, barely one out of a thousand companies become big successes. Of those 999, fewer than one out of ten are there because their product doesn’t work; more than nine out of ten fall in that group because they fail to find customers or a market.

We (Academic Business Advisors) are in business to lower that sales and marketing risk for education technology companies.

I got that insight listening to Steve Blank’s talk in Stanford University’s Entrepreneurial Thought Leader Series. Here is the summary of his talk; these are valuable concepts for anyone thinking about launching or expanding a product or business.

Here’s the standard, accepted model for launching a business:

Most entrepreneurs, reinforced by their investors, advisors, and board, are focused on getting a product out and to the first customer. But, most of the failures aren’t because the product doesn’t work; they are because the product couldn’t find a market. The model above causes hiring of staff, sales, and marketing based on events in the product development cycle; that’s backward. You design, build, test, and refine for a successful business based on market need and feedback.

What entrepreneurs need is a model and tools that reduce sales and marketing risk, because that’s where businesses are most likely to fail. If you don’t find the right market and you don’t figure out how to get lots of customers early in the process, you’re just going on a random walk. As Blank summarizes:

The job of an entrepreneur is to become a domain expert enough to understand a day in the life of their customer, their buyer, and anyone else in their organizational exchange. If you can’t do that, don’t do it, and become like almost every other entrepreneur who goes out of business.

If you’re thinking of creating a product or company, the first rule is to understand that you have made a lot of guesses or assumptions about the market. You’ve assumed that there is a problem, and that you know what it is. You’ve assumed you know the people who have that problem, and that there are enough of them to matter. You’ve assumed that you can get those people to pay you to solve that problem with your product.

You need to figure out how to turn those assumptions into facts. How do you do that? Get out of the building and talk to the people who will be using and buying the product. Is the problem that you think you’re solving really a problem for them? Is it so important to them, that they would actually pay you to solve it with your product? Do they have the authority and funds to pay what you need to continue in business?

The best way to do this is to find early ways to get them to buy. Discover the minimal feature set that customers will buy; and use an agile development methodology so that you can iterate quickly to meet how they really use the product. A good launch is when you’re able to define your customer archetype: what they do every day, what they think is important, why they think it’s important, what they buy and use, and how they pay for it.

A startup is not a junior version of a large corporation. You don’t need to start with a CRM system, or a VP of this and a VP of that. The entrepreneur and developers have to be listening to customers and hearing their feedback directly, not filtered through a vice president of sales or marketing. Can’t you just hear the entrepreneur saying to the VP of sales, “No, you’re wrong, we don’t need to change the specs; you just need to explain the features better, then they’ll get it. If you can’t do that, we’ll find a VP of sales who can.”

Everyone in the company needs to be part of the customer development team.

Yes, you need to develop a great product or service and sell it to your first customer.

The goal of the startup isn’t launch to first customer; the goal is to develop a scalable sustainable model, so you know that $X in increased sales or marketing results in $Y of increased sales and usage. You can only do this when you know how your customers think.

To be a successful entrepreneur or developer in the education sector, you have to understand how your customers think. When you know who they are, how and why they buy, how they process information, what they think they need, and how they pay for it, and you’ve got the product or service they can buy and use to solve those problems, you’re on your way.

Here’s an exercise to try.

If you have a great idea for an educational product; write down the problem that that idea solves. Then write down who will use it, who will buy it, and how they will pay for it. Then talk to 10 of those people who you think will use and buy it. Ask them, do they have that need, do they think your solution solves that need, would they be willing to pay that much for that solution, do they have the ability to get those funds, and what other significant or bigger problems do they face. I’d be very surprised if you come out with the exact same product you came in with; but I’d expect that your product and potential company would be significantly stronger.

This dovetails with what we at ABA do. Every day, we see really smart people who are passionate about kids and have created products that can impact the way they are educated. Our job is to help their team understand where they have made assumptions about the marketplace, test those assumptions, modify their approaches, and then develop that scalable, sustainable model to success.

What I Learned Buying a Rug in Turkey

I had no intention of buying a rug on our trip to Turkey in December 2006. Certainly, not on the first day. I’d already purchased a rug; when my son and I had been abducted in Tunis, Tunisia in 1999. But, that’s a different story.

Yet, there I was, just 4 hours after arriving in Istanbul, shaking hands with a rug merchant as he packed up our newly purchased kilin carpet. How did this happen?

Educators, business people, publishers, we all seek to influence others, and we are all influenced by others. Perhaps my experience in Turkey, seen through the prism of an expert in the principles of influence and persuasion can help us all.

First, let me describe the events leading up to the purchase. Then, I’ll relate those events to principles contained in the book Influence: The Psychology of Persuasion by Robert Cialdini.

Our hotel, the Mavi Ev, or Blue House Hotel, was just across the street from the famous Blue Mosque in Turkey. As soon as we stepped out to go visit the mosque, the first person approached us,

Salesman: “Do you want to buy a rug?”

Me: “No thank you.”

Salesman: “Where are you from?”

Me: “No thank you, we’re on our way to view the mosque.”

In the 50 yards between the hotel and the entrance to the mosque, we were approached at least 5 times, in similar ways. The sales people were pleasant, often humorous, never hostile. But always persistent, asking at least 5 to 6 questions to try to engage us.

“How long are you staying in Turkey?”

“How do you like Turkey so far?”

“Are you thirsty or hungry?”

“Would you like some apple tea?”

“Do you know where you are going?”

After the Blue Mosque, we walked across the park to the Hagia Sophia, and were approached another 5 to 6 times. But, as we walked up to the Hagia Sophia, we found out that it had just closed, and someone came up to us.

Person: “It’s a shame that the Hagia Sophia closes so early. Have you seen the Cisterna Basilica, yet? It’s still open.”

Me: “Yes, that’s one of the things I’ve wanted to see.”

Person: “Let me show you where the entrance is, it’s just a block from here.”

Me: “We can probably find it.”

Person: “I know, but it is really no trouble and will save you some time. How long are you in Turkey for?”

Me: “We’re staying for 9 days.”

Person: “The entrance is just here, make sure that you walk through all of the passages. Some people just go into the Cisterna, take a look, and then come back up. There is a whole passage to follow, and you’ll see the pillars of Minerva and eventually come out about a block down the street.”

Me: “Thank you.”

Person: “I’ll wait for you at the exit. In case you’d like to have a glass of tea and see our showroom. There won’t be any pressure for you to buy anything, but as long as you’re in Istanbul, you should get to know what types of things are on sale.”

Me: “Thank you, but we’re not buying anything today. If we buy anything, it will be on our last day.”

Person: “I didn’t say anything about buying anything. After all, no one needs to buy a rug. But, this will just give you a chance to get educated, and no museums or mosques will be open at that time, anyhow, and it will be too early for dinner.”

We entered the Cisterna. And, sure enough, at first it seemed that we should just go in and take a look, but we walked around the whole path, and it was definitely worth the extra time. By the way, if you do end up in Turkey and visit the Cisterna, bring a tripod. It’s large and dark, and you can get striking pictures with a 2 to 3 second exposure. As we emerged from the exit, who do you think we saw?

Person: “How did you like it?”

Me: “It was pretty extraordinary.”

Person: “Did you get to take any pictures? Can I see them?”

Me: “Sure, take a look.”

Person: “And, now, maybe you would honor me by taking some time to have a glass of tea, relax, and learn about Turkish carpets. My shop is just 20 meters this way.”

And so, on our first day, we ended up in a Turkish rug merchant. But still, we had no intention of actually buying anything. The job of the first person was to bring people to the shop; he was the shill. This was actually the end of our interaction with him. Once in the shop, we primarily interacted with one of the owners.

Owner: “Come, sit down. Let me explain the different types of rugs to you, and educate you so you’ll know a good rug from a cheap one. Here, have some tea.”

Owner: “You know, no one comes to Turkey to buy a rug. It’s not something that you need. Yet, most people end up buying one. Why? Because, it’s art. It’s something they decide that they like. And, it’s something that they will have and enjoy for the rest of their lives. A good rug will last for over 100 years.”

Then, he proceeded to explain the five different types of rugs, the different materials, the different types of knots, and how rugs changed colors as you looked at them from different angles. And also, how December is their slowest season, how they would never be able to devote this much time to someone in the summer season, how to tell real wool and natural dyes from synthetics, and how the prices of rugs are usually 25% less in December than in the summer.

After about 45 minutes, with the education winding down, he asked us which, if any, of the rugs we liked, and if we wanted to see more of that type of rug. Rightly or wrongly, at this point, I felt a little guilty. We’d used up 45 minutes of his time, along with three assistants, we’d drunk his apple tea, we’d learned a lot about rugs. I was still not willing to purchase a rug, but we were at least willing to let him know which of the rugs, we liked.

Once the family had picked one of the rugs, he then proceeded to show us about 20 rugs of the same type.

Next, he asked us which three of those rugs we liked the best.

It was then that my wife said, “you know, we really do need to replace the rug in the dining room sometime, as well as the rug in Rosie’s (our daughter) room. But, we do not need to purchase a rug at this time.”

The owner then asked my daughter, “if you could have one of these rugs, and if you didn’t have to pay for it, can you see any of them working in your room?”

And she pointed to one of the rugs. “I really like that one.”

Owner to Rosie: “You have very good taste. That rug is 100% wool. Look here, that’s how you can tell that they dyes are natural and not artificial. Look at the weave, this is how you can tell it is not machine made. It takes someone three to four months working full time to make a rug like this.”

Owner to me: “I know that you are not looking to purchase a rug. In the summer, I would start off with a price of around $3,000 for this rug, and we would easily sell it for more than $2,500. But, if you were interested at all, I’d offer you this rug at $1,800.”

Me: “Thank you, but we really are not interested in purchasing a rug right now.”

Owner: “Nearly everyone who comes to Turkey is not interested in buying a rug. But, you know, nearly everyone who comes ends up buying one. Because they find something that they really like, something that is going to last them the rest of their lives, and something that they will forever remember their trip to Turkey with.”

Owner: “Is there any price, where, if you could own this rug for that price, you would walk out of here happy?”

Me: “Well, I’m really not looking to purchase a rug.”

Owner: “Yes, and you may end up not purchasing one. But is there any price where you would say, ‘I am happy to buy that rug.”?

Me: “I guess, if I could have that rug for $800, I’d probably be happy.”

Owner: “This is a rug that I would be selling in the summer for over $2,500. But you know,” looking at Rosie, “you are a very lucky young lady to have a father who has the means and the desire to purchase something like this for you that you really want. I hope you appreciate him.”

Me: “Wait a minute, that’s a line that I’ve used in sales training before. That comes right from Joe Girardi.”

Owner: “You are in sales? What do you sell?”

Me: “I’m in education, but I used to sell and I used to train sales people.”

At this point the owner comes right up to me, within about two inches. He grasps my right hand in his, starts shaking it, and says, “I think we can come to a deal. How about $1,500 for the rug?”

Me: “I really didn’t come here to buy a rug. I said that I’d be happy to purchase the rug for $800, but it really wasn’t my intent to purchase one.

Owner, still holding and shaking hands with me: “How about $1,400?”

Me: “Well, maybe $900.”

Owner, still shaking my hand: “$1,300.”

Me: “1,000”

Owner: “I just cannot sell it for 1,000, let’s say we have a deal at $1,100.”

Me: “Okay.”

And that was it. My daughter now has a Kilin rug from Turkey in her bedroom. My son is just shaking his head, “Dad, you did it again.”

How did the two sales people do it?

According to Robert Cialdini, there are 6 weapons of influence. We can all use them, and they are used on us, either knowingly or by accident:

1. Reciprocation: we try to repay what another person has provided us

2. Commitment and consistency: we desire to be consistent with what we have already done

3. Social proof: we tend to rely on what other people are doing to determine our own actions

4. Liking: we tend to go along with and follow people we like

5. Authority: we feel a sense of duty to follow someone who has authority

6. Scarcity: opportunities seem more valuable to us when their availability is limited

You can see how the rug salesmen used practically every one of these weapons in getting me to purchase the rug.

Reciprocation: The shill gave helped us find a suitable site after we were unable to enter the Hagia Sophia, then, he provided additional instructions to make sure we enjoyed it fully. The shop owner gave us snacks and apple tea, plus spent a lot of time with us educating us on oriental carpets.

Commitment and consistency: Once the shill told me that he would meet us at the exit, and once I had not denied that we would, consistency led us to follow him to the shop. But the real and masterly use of the consistency weapon was by the shop owner, who came up to me and started shaking my hand as we negotiated price. It’s hard to back down from making a deal as you are affirming it by shaking someone’s hand. I’m going to try that technique sometime with my kids when I need them to do something that they really don’t want to do, like pick up their rooms.

Social proof: There was the shaking of hands by the shop owner; if he was signaling that we had a deal, who was I to say we did not? But, there was also the assumptive closing by the shill, saying that we would meet at the exit of the Cisterna Basilica.

Liking: Both the shill used helpfulness, stories, interest in our concerns as ways to get us to like them, to create a rapport, before any selling started.

Authority: We went into a lot of shops in Istanbul. I have to say that in practically every single one, we ended up talking with the owner. Of course, I have no way of knowing if it was really the owner, but the person spoke as someone in authority.

Scarcity: knowing that prices were generally a lot higher, and that was confirmed by my son, who’d been in Istanbul for the past three months, let us feel that we would not have the opportunity to purchase at that price in subsequent trips.

What lessons can we take from this?

First, in subsequent negotiations and interactions, we can be more cognizant of the techniques that the sales people were using; “Oh, this is the ‘reciprocation’ technique, don’t feel that you need to reciprocate. Only purchase if you want the item.” Being more aware of these weapons let’s us be more resistant.

Second, we can utilize these techniques ourselves. Instead of launching into immediately telling someone what to do (as in “go clean your room”, or “do you want to buy this service?”), we can find a way to offer something, we can spend time to insure that the person is in a receptive mood where they like us, we can create a perception of scarcity.

Third, read Robert Cialdini’s book. It will provide even more examples to help you manage better, lead better, and resist others who would try to influence you to do things that you don’t really want to.

And, with all that, we’re happy we bought the rug; it will provide us with a lifetime of memories of our trip to Turkey. If you want to view a short slide show of our trip along with commentary, you can view about 40 pictures at http://www.flickr.com/photos/mweisburgh/sets/72157594454226960/.